2016 – Will Digital deliver innovation?

Jennifer Kyriakakis, Founder and VP Marketing at MATRIXX discusses the themes that she anticipates taking centre-stage in 2016 as CSPs continue in their evolution towards fully-fledged digital brands. The IoT will take off with the help of virtualised systems; the pre-paid mobile market place will receive a wave of new innovative data services; and paying for services and products instantly will be the new way of life for mobile subscribers. Roll on 2016…

Most CSPs have been evaluating, strategising and undertaking fledgling digital initiatives over the past 12 to 18 months, and a common conclusion is emerging: a complete digital transformation is simply too difficult to achieve for most of them. Investing in upgrading outdated legacy infrastructure does not deliver the agility and cost benefits needed to compete against continually emerging digital brands and MVNOs.

However, CSPs are not giving up. In 2016, they will ditch multi-year, complex – and costly – digital transformation projects in favour of fast-track digital programs, standing up light-weight digital ecosystems and IT stacks outside of their existing IT environment. These digital systems will be deployable in 6 months or less, deliver ROI in the financial year of launch, and will provide an upgraded experience which in some cases will sit under a new digital brand. Watch for CSPs to launch Digital brands in a light, cost-effective, fast way.

Digital strategies trickle down into the pre-paid market

In 2015, most telcos in first world markets have undertaken some form of digital transition, tailoring the post-paid experience for data hungry subscribers. However, most of the world’s mobile subscribers are pre-paid and are yet to experience the full range of digital services smartphones now offer. This will change in 2016 as CSPs work to bring low cost smartphones and a full digital customer experience to the pre-paid market. Pre-paid customers often concentrate their usage on free WiFi and have traditionally been reluctant users of mobile cellular data services. Going digital allows telcos to tempt users with trial promotions, sponsored content, shared data, and other low cost packages that can be purchased instantly through the handset. If data packages can be sold in smaller increments directly through the handset instead of requiring a voucher or IVR interaction, the result is easier and more affordable 3G and 4G options to drive uptake and higher ARPU.

IoT platforms start running out of runway

IoT is a hot topic that is set for the touch paper to be lit in 2016. Big data platforms are running full throttle to figure out which data matters and which can be thrown away. As connected devices become more functional and commonplace, the industry is realising that there is a significant gap between the infrastructure required to support IoT devices and the ability to monetise IoT data. To make the economics work, industry players will either need to punt on profitability, or find more cost effective solutions to monetise the data generated by the IoT. CSPs and IoT players will look for the next wave on innovation and scalability to handle the data deluge, and better analytics to drive business models that will stand up to a business case.

IoT momentum builds use case for virtualised BSS

NFV continues to gain momentum and with virtualized policy deployments on the rise, CSPs will start looking at virtualising BSS components such as charging, balance management and billing. This will help them trial, deliver and monetise IoT data initiatives.

There are currently many concerns surrounding security, privacy and system latency to consider when virtualising BSS, but the continued growth of connected devices that comes hand-in-hand with IoT will be the key use case to trial virtualised BSS. Economically it makes sense, given that IoT is low margin and currently only delivers a fraction of the revenue CSPs generate, and any issues with customer data and latency impacts to customer experience will be minimal. The IoT is, therefore, the perfect testbed for virtualised BSS initiatives.

Pay NOW becomes a way of life

Payment models are getting a shakeup across the board. Services that are traditionally billed in arrears are shifting to pre-paid models, and devices that used to be subsidised or purchased up front are now being ‘financed’ as a way to retain customer loyalty and reinvent the two year contract.

But, in 2016 we will see telcos deploying a third option which does not fall into the traditional prepaid or post-paid bucket. As the subscription market has peaked and we move into a more consumption based economy, the preferred method will be ‘pay NOW.’ Sign up with your credit card details, and when subscribers buy something, they pay for it instantly. For example, if subscribers want 2 GB of data or 48 hours of Facebook access, they pay for it, own it and use it as they wish. There will be no dealing with messy credit checks, rollovers, vouchers, or invoices. If a subscriber runs out of a service, they buy more and the operator will charge them instantly and be done with it. It’s as easy as ordering a movie from Amazon.

Smart data packaging takes hold

Packaging, selling and delivering content and services through digital channels will finally enable telcos to get creative on data pricing and packaging. In 2016, we will see a significant number of CSPs moving away from selling buckets of data, to selling customisable plans that are packaged in some form other than large chunks of GBs. It could be ‘digital dim sum’ or ‘mobile mezze’ – the repackaging of mobile services into smaller, bite-sized portions will take on various flavours and forms. Service providers will be experimenting to find the right mix of customer preference and margin to make their offerings more consumable while maintaining profitability.